Home Working Socio-Economic Analysis: Research Findings

Executive Summary

Stantec was commissioned by Transport Scotland to undertake initial analysis of the transport and socio-economic impacts of higher levels of home working in the wake of the 2020-21 COVID-19 pandemic. The main areas considered here are:

• Trends in travel volumes and home working during the pandemic
• How this may evolve once restrictions are ended and the pandemic is over
• The consequences for travel volumes of increased levels of home working
• Scoping of how increased levels of home working could impact society and the economy
• Identifying which of these impacts may require a policy response to prevent an undesirable outcome from a public policy perspective

It should be noted that this area of research is one where data sources and reports are many and are emerging on an almost daily basis. This report should be seen in this context as a snapshot of the multitude of data available at the time of writing.

Travel and the Economy During Lockdown

Travel volumes by mode during lockdown have been monitored throughout the pandemic and are well established. Whilst the level of car travel ‘recovered’ to pre-pandemic levels in summer 2020, after an initial drop to around 15% bus and train travel only returned to around 50% and 25% of normal level respectively until dropping sharply again with the lockdown of January 2021. Bus and rail services have been reduced in line with this reduction in demand, itself a reflection of government advice to avoid public transport. There is some international evidence (e.g. New Zealand) that train and bus travel is remaining subdued compared to car travel when restrictions are lifted, but this does not relate to a ‘post-vaccination’ society so there is likely to be residual reluctance to use public transport in New Zealand as there still are sporadic outbreaks. Walking and cycling have increased during this period, both as a substitute for other modes and purely for leisure.

Level of Home Working

There is a range of survey data and analysis which explores individuals’ and companies’ home working intentions post-pandemic. The results vary widely and will depend on the nature of the question asked and the sample characteristics. It is therefore difficult to reach a consensus on the likely percentage of individuals who will adopt new home working and the frequency with which they will do this. There is therefore substantial uncertainty as to the level of home working which will ultimately emerge after the pandemic ends and people’s behaviours have fully stabilised. In particular there is uncertainty around:

• the degree to which people who can work from home will want to do so, and how this may change as some people return to the workplace – will there be a domino effect where more will follow and so on?
• the degree to which companies (and public bodies) will look to encourage/make home working compulsory in part or in full (or indeed work from anywhere) to attract/retain staff and/or to reduce overhead costs associated with their office estate. So for some the decision as to whether to adopt home working or not will be taken out of their hands.

The evidence around which industries/occupations lend themselves to home working is however fairly well developed through a number of surveys which have been undertaken during the pandemic.

The location of these jobs can be readily established via BRES and these jobs are typically prominent in city centres and business parks – town and city centre based jobs are the locations with the highest mode share of more sustainable modes and analysis of census travel to work data has confirmed the scale of this. The residential location of those who are most likely to be home workers can also be obtained albeit from ageing census data. These areas are typically more prosperous than other areas.

Transport Scotland’s series of COVID-19 Public Attitudes Survey Data has been fairly stable with (at the time of writing) 37% of respondents indicating that they intend to work from home more often after the pandemic. For the purposes of the figures that follow, it is assumed that 37% of workers will work from home 50% of the time, although as noted above there is a lot of uncertainty around these figures.

Impacts on Traffic and Travel Volumes

The potential impact of reduced commuting on the overall volume of travel by mode has been analysed based on well-established DfT National Travel Survey data which provides a long-running time series of trip rates and distance by purpose and mode of travel.

Commuting to work accounts for around a quarter of all car/van traffic and bus travel but over one third of rail travel - at its simplest therefore, if car commuting reduced by say 20% due to increased home working, then total car traffic would reduce by 25% * 20% = 5%.

Based on the Transport Scotland survey (and the associated assumptions) and from analysis undertaken for this study, the table below shows the implied reduction in travel by mode associated with increased home working from three different perspectives:

In normal times, a 4-5% reduction in car traffic would equate to perhaps 3-5 years of traffic growth so whilst this in itself does not represent a fundamental change, it would make a material difference to emissions at the Scotland-wide level. However, when the geography of ‘location independent’ jobs is taken into account, the impact on car traffic reduces but the impact on public transport is greater, at 11% and 19% reductions for bus and rail respectively. Given that the majority of jobs where home working is more likely are office-based, for most people this implies travel during AM and PM peak periods. The potential impact on peak hour traffic volumes is therefore much higher with car and bus reductions of up to around 20% and rail passengers dropping by over 25%.

Impacts of Increased Home Working

Many of the socio-economic impacts of increased home working will be a mixture of positive and negative impacts, most fundamentally associated with a redistribution of where people spend time and money. The main impacts are summarised below in five categories.

Transport behaviour impacts

• Reduced peak hour travel by all modes and associated reductions in emissions, noise etc., traffic congestion, accidents and crowding on public transport services – this will be offset by any travel generated in the course of the day when home working or during any increased leisure time.
• Benefits in the shape of reduced peak hour journey times and improved journey time reliability due to lower traffic levels for those still making trips by car or bus.
• Reduced demand for public transport services.
• Reduced levels of walking and cycling associated with commuting - again this will be offset by any walking and cycling generated in the course of the day when home working or during any increased leisure time.

Impacts of reductions in commuting travel time and costs

• Reduced money spent on travelling to/from work – this will result in a range of winners and losers as this money is either e.g. spent elsewhere, saved, used to pay down debt, or spent on imported goods.
• Reduced time spent travelling to/from work – can be used for leisure, flexible working, additional working etc. so there would be a range of impacts associated with each of these.

Impacts of spending time at home and not at the workplace

• Distributional impacts of change in daytime spending from the workplace to the home area - will affect businesses which rely on workplace footfall and benefit those more locally.
• Requirement for good digital connectivity and increased home fuel use (implications for household costs and emissions).
• Some people’s domestic arrangements are not conducive to home working with implications for continuing employment.
• Personal productivity may be positively or negatively affected – some will also have a negative wellbeing impact due to decreased personal interaction with colleagues.
• Reduced demand for employment floorspace – with major implications for support services, the commercial property market and city centres/business parks.

Employers’ perspective

• Availability of labour could both broaden and contract due to loosening of geographical constraints but some being locked out of the job market due to unsuitable domestic arrangements.
• Productivity: again pros and cons, although digital approaches should bring gains, there may be issues incorporating new and particularly young staff into organisations and providing effective training and career development.
• Costs: presents an opportunity to significantly reduce overheads by cutting back on office space and replacing business travel with virtual meetings.
• Adaptation: there may be an element of competition between employers to provide the best balance of workplace/work from anywhere arrangements.

Loosening or breaking of link between home and the workplace

• This could bring a substantial change in the distribution of population across Scotland as people move further away from their workplace. There would be a range of social and economic impacts in terms of communities affected and provision of public services in areas which see in-migration.

Potential Areas where a Policy Response may be required

We have identified four broad areas where policy responses may be required in the light of this range of impacts and these are summarised below.

Transport

• Loss of public transport revenue (and particularly season tickets in their current form) will undermine commercial services and imply increased subsidy or fares to maintain existing services – there is a risk of a spiralling impact of reduced patronage leading to reduced service levels leading to reduced patronage and so on.
• The form of the public transport ‘offer’ based on high capacity peak hour provision to serve city centres may have to be reviewed – the nature of the network of services may also have to evolve in line with changing demand.
• Additional car use may have become embedded for some throughout the pandemic increasing traffic and emissions – a policy response may be required to encourage these people back onto public transport. This increase in car use (mode shift) could offset the reduction in car use caused by decreased commuting.
• For some there will have been a loss of physical activity which was previously integrated into their daily routines whilst commuting. Although there is evidence that people are more willing to walk/cycle for leisure and as a substitute for other modes, this may be transient, so a policy response may be required to reinforce the ‘good’ habits people developed during lockdown.
• Future investments in ‘mass transit’ and infrastructure aimed at alleviating congestion hotspots during peak commuting times may need to be reviewed as they may longer represent value for money. It may be possible to re-allocate 'surplus' capacity (resulting from reduced peak hour traffic flows) for other purposes.
• Any net reduction in car use will reduce fuel duty and VAT and could have an impact on the viability of some filling stations.
• As the relationship between supply and demand could be materially changed, parking provision and charging policies may need to be reviewed, potentially including proposed workplace charging levies.

Digital infrastructure and energy

• Some parts of the country are not able to meet the increased demand for broadband, high speeds and bandwidth. This will disadvantage those living in poorly served areas, have a labour market effect and also impact on productivity where the level of connectivity affects performance.
• Those now working from home will see increased home energy costs and this could be problematic for some at the margin – grants or tax policies could address this.
• Domestic emissions will be increased – this could hasten the requirement for alternatives to gas for domestic heating in particular.

Labour Market

• For some the absence of a suitable home working environment, allied to the expectation that work will be undertaken from home for some roles will affect access to the job market. A proportion of potential employees would then be excluded from some jobs introducing a new inequality.
• Those with a sub-optimal domestic working environment may see their productivity drop, and/or their wellbeing suffer. For some there may also be a degree of social isolation resulting from home working which again could impact on wellbeing.
• A policy response may therefore be required to provide flexible workspaces for individuals whose domestic arrangements do not lend themselves to home working. The market may however provide a solution under some circumstances.

Planning & economic development

• One of the biggest impacts could be on larger town and city centres and business parks. These locations host high numbers of jobs which could be undertaken from home or elsewhere. If there is a material reduction in commuting to, and therefore footfall in these areas, those providing retail, hospitality and support services based on this will be negatively affected. The commercial property market will see a sharp drop in demand which would feed through to other areas such as retail. A substantial planning and economic development policy response may be required to facilitate a re-purposing of these areas.
• There could also be significant impacts on the housing market which would likely require a planning policy response. Over time there could be significant change in the distribution of where people want to live with the assumption being that people may wish to move to more rural locations to obtain larger properties, or indeed access to more green space in the event of another pandemic. This will create development pressures in new areas which can bring tensions to the communities there and pressure on local public services. House price inflation in desirable hot spots could have an impact on local families being priced out of their local property markets. Allied to this could be further issues with second homes policy. The added work/home flexibility could make second home ownership more attractive for some adding to some of the policy issues which emerge from existing levels of second home ownership in parts of the country.

Conclusion

This report has scoped out a range of potential transport and socio-economic impacts of increased home working. The key issue therefore is one of scale. If home working does not materialise on the scale envisaged by some, then these impacts could be minor. On the other hand if home working is adopted at scale, then there would be fundamental impacts across a wide range of areas and the requirement for a range of policy responses.

Given the uncertainty around the potential scale of home working post-pandemic, it would be beneficial to monitor the level of actual home working on a regular basis as the country emerges from the pandemic. This information could be collected together with basic demographic details, industry and occupation to develop a clear picture of the types of jobs and types of people now working from home who were not doing so before. To prepare for and provide evidence around increase home working, there would also be value in considering implementing a medium-term monitoring programme drawing on some of the logic set out in this report to gauge the scale of home working and the severity of its impacts, both positive and negative.

Read the full report from Stantec